If America prohibited such gouging, would the rest of the world accept price increases on their drugs? If the current administration is so interested in inflicting harm on the rest of the world, maybe they should be convinced to lower drug prices.
You didn't provide any context of why you think that could be the case or the mechanism through the alleged subsidies happen.
You’re confusing capital and operating costs. Once you’ve developed the drug, selling everywhere you can makes sense. When considering whether to develop a drug or invest in something else, America’s biotech market absolutely turns keys. (But not as uniquely as we think. Europe has a thriving R&D market, it’s just directly subsidised.)
You literally have to get fucked or the world get fucked harder and drags you down with them. Same reason why NATO and the farm bill are good for America.
The greatest trick from the wealthy is to not just exploit you to get it, but to destroy any possibility of resistance to them. Even trying to resist does nothing but harms the under class even more than if you simply accept it.
“If you want a picture of the future, imagine a boot stamping on a human face—forever.“ - George Orwell, a communist/socialist
Edit: To the guy who claimed Orwell wasn't a communist, the POUM who he fought for in the Spanish Civil war was communist (https://en.wikipedia.org/wiki/POUM) and according to the soviet union was specifically trotskyist. If you fight for them you are a communist, even if and especially if you claim you weren't later in life.
Why do they care? Referral bonus?
Did you report them?
The Economist's analysis creates a model that shows Pharma companies making "excess profits" (greater than 10% return on capital) second only to technology companies. In that sense, by the Economist's terms, they are in fact gouging.
But that's not really the point the Economist wants to make; rather, regardless of whatever profits Pharma is raking in, they're in fact a small component of overall health care spending. You could zero out Pharma profits (this is my point and not theirs) and not materially change US health spending.
In all these discussions about American health care, my first take is that everybody should go download the CMS National Health Expenditures, and make a beeline for "Expenditures by Type of Expenditure and Program" (it's just an Excel spreadsheet). It's an extremely intuitive breakdown of where all US health care spending goes, and who's paying for it, all on one sheet.
There are a lot of narratives about health care spending that do not survive first contact with that spreadsheet.
E.g. my son has a peanut allergy and so we need to buy EpiPens. They were hundreds of dollars, and the vendor played MBA-nonsense games like requiring two to be purchased at a time. Meanwhile I was able to drive to Canada and buy the exact same thing (and as many or as few as I needed) for tens of dollars.
In the context of the cost of medication, the $449B on "prescription drugs" doesn't break out what goes to drug makers vs PBMs or anyone else. We can easily imagine a world without PBMs that still delivers drugs to patients, but someone has to actually make the drugs. We can also ask, are people on medications they don't actually need? Are we sometimes _causing_ later health issues when medicating (e.g. fueling a giant opioid crisis)? None of this is apparent in the top-line spending figures.
That is not evidence that "Big Pharma gouges America". It is evidence that Americans pay a lot more than other countries. Only that. The conclusion doesn't necessarily follow from the premises.
Want to understand why? Read the article's last paragraph:
> The bulk of the rents is captured instead by providers of health-care services such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity.
As always, no one reads anything.
In the whole or in relative terms? Source, even if personal or anecdotal?
I am willing to consider your point because, to be fair, the article doesn't show any data that indicts the insurers. They just blame them at the end without any evidence.
> all health care spending goes to companies that deliver health services directly.
Well, that wouldn't explain why medication alone is more expensive in America, right?
But accepting your argument: is it because of greed and oligopolies, incompetence or excess of regulation?
This means the only way for insurance companies to increase profits is to increase the price of healthcare, and they have zero incentive to try and lower the amount of money they pay out for healthcare which might otherwise have been split between profits and lower premiums.
Mostly I'm saying: you don't have to axiomatically derive why this is. Medicare collects and synthesizes this data.
The debatable part is the rebate is back to the employer who is allowed to simply pocket the money, though one could argue its returning the amount the employer is covering, often more than the employee. :shrug:
Believe or not, I get yearly notices from UHC about rebates for the prior year.
> As always, no one reads anything.
The implication of the article was the "bulk of the rents" applies to healthcare costs in total, not just to drug costs. I.e. drug costs are not a huge part of the healthcare costs.
That by itself doesn't guarantee an understanding of why specific medication costs are sometimes 10x or whatever of other 1st world countries.
(but I didn't read the article; just the rest of the comments)
>America is a lucrative market for the world’s drug giants. Many pharma bosses admit that is where they make most of their profits. But are these profits really responsible for America’s ballooning health-care bill? The short answer is no.
I don't think the article is disputing that Americans pay more for drugs than other countries, only that the pharma industry isn't the top gouger (or even above average) in the healthcare industry.
The drug manufacturers are making massive profits, and nobody is stopping them.
Hilariously the whole TrumpRx card is kind of a step in the right direction, I've screamed for years that manufacturers blatantly rip everyone off and if just use a made up discount card system all of a sudden the drug is 30-90% off.
Ideally the government just says the global price is the US price, and eliminates discount cards entirely.
https://en.m.wikipedia.org/wiki/Betteridge's_law_of_headline...
This category of "providers of health-care services" is rather over-broad, and I wish they had split it up more. Shouldn't hospitals (which actually _provide health care_ and are necessary parts of the healthcare system) be in a separate bucket from the "middlemen"?
And within the hospital category, don't we need to draw some distinctions? Currently in the US there's been press about how recent funding changes are causing a bunch of rural hospitals to shut down. It seems that some hospitals are major money losers, though we as a society may want them to continue to exist (or else a rural person in a medical emergency has no chance of getting care in time). But what's happening at the hospitals that _are_ collecting "rents", esp since in more urban contexts there are often multiple hospitals and one might expect more competition?
https://www.ama-assn.org/sites/ama-assn.org/files/2025-04/20...
The second one I can hardly start on, "health care services" is a medium circle ( circle size = combined market capitalization ) with the second highest "Aggregate return on invested capital" and in the middle of "median weighted-average cost of capital".
I know its called "the economist" but they usually make their articles readable by people without a econ degree. If I had a suspicious mind ( I do ) I'd think this was deliberate obfuscation.
Also "health care services ... such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity"
That is a lot of different interests bundled together. How can they say insurers are the true money makers when they are not even broken out?
blindriver•47m ago
The price in Canada is around $100. Yes, Big Pharma gouges Americans.
alephnerd•46m ago
Which is what TFA points out as well:
"The bulk of the rents is captured instead by providers of health-care services such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity. They have higher costs of capital than drugmakers, but they also clear our 10% hurdle much more comfortably (chart 3)"
tptacek•45m ago
Analemma_•35m ago
50 years ago, there were many more pharma companies, many more insurance companies, and many more hospitals under individual ownership. First the pharma companies consolidated, which give them monopoly pricing power over insurers. So then the insurance companies consolidated to they could negotiate on equal footing, but then they had monopoly pricing power over the hospitals. So then hospitals consolidated so they could negotiate. And now after decades of this, we're right back we're started, except for consumers, who can't consolidate and hence get fucked.
The two solutions here are either breaking up all the monopolies at the same time-- pharma, insurance, and hospitals-- so that everyone has market competition again, or letting health care consumers consolidate so they have pricing leverage-- i.e., forming a single-payer health-care system where the government negotiates deals on behalf of a 330+-million payer pool.
It does not make sense to either blame or spare one single sector: the pharmas, insurers and hospitals are all guilty, though in a sense all of their hands were forced by their counterparties. It's a coordination problem of exactly the kind government is supposed to solve, hence why government-run health care eventually seems like the only option.
SJC_Hacker•19m ago
Consumer consolidation is called voting. Its too bad most consumers have voted in politicians who don't represent their best interests
thmsths•15m ago
deadbabe•35m ago
tptacek•33m ago
cpfohl•28m ago
testing22321•28m ago
How much profit is enough?
megaman821•13m ago
bradfa•15m ago
newyankee•26m ago